Login
iscover
Recent high-profile payroll cases across the country should spur businesses to review their payroll systems to reduce their risk of tax and legal compliance issues, says one mid-tier firm.
Newsletter
Businesses urged to review payroll systems in wake of ongoing underpayment revelations
14 October 2019
•
10 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Citing research from the Australian Payroll Association, RSM associate director Jane Wood said that while more businesses are starting to outsource their payroll services, 67.5 per cent are still managing payroll in-house, leaving them open to a number of tax and legal compliance risks.
“Payroll complexities include determining the appropriate base to apply superannuation contributions or how to treat the various components of a termination payment, which can include whether the person’s employment position is redundant (and thus eligible for concessional tax treatment) or attracts overtime and penalty rates,” Ms Wood said.
“It is often difficult for smaller employers to keep up with constant changes in various legislation that governs employee entitlements. For example, earlier this year, the ATO made clear its view on applying compulsory superannuation to annual leave loading (the 17.5 per cent applied to annual leave), which means many businesses will be caught out continuing with old practices.”
With Australian conglomerate Wesfarmers most recently revealing a $15 million payroll error, following on from a string of revelations from other large companies including Michael Hill Jewellers, the ABC and MAdE Entertainment, Ms Wood believes it is crucial for all businesses to review their payroll systems to determine whether they’re at risk.
“Companies can reduce their risk of tax and legal compliance issues by staying on top of changing rules and regulations,” Ms Wood said.
“However, this can be easier said than done, so it’s important to have a system in place that can immediately identify when a change to an award or relevant legislation occurs and adapt accordingly, rather than relying on annual reviews. The system should identify errors and rectify payments quickly to reduce company risk.”
==
==
Ms Wood believes organisation can take four key steps to ensure they don’t run into trouble due to outdated payroll systems.
These include planning an effective way to managing payroll, including having adequate payroll systems in place; choosing the right accounting software to support payroll accounting; involving staff in decisions; and seeking expert advice on payroll and tax legislation.
You are not authorised to post comments.
Comments will undergo moderation before they get published.